Cryptocurrencies have come to improve the way we manage money. Thanks to their decentralized nature, we can firmly say that we are our own “banks” without having to rely on any external institutions. However, and sadly, some people have used them for illegal purposes.
Sigal Mandelker, who acts as the United States’ Under Secretary for Terrorism and Financial Intelligence while representing the US Department of Treasury, extended a petition for the crypto community to help prevent the illicit use of these digital assets.
Coping with New Technologies
Mandelker delivered a speech this week, most precisely on December 3rd, at the Financial Crimes Enforcement Conference. She explained that all emerging technologies come with a significant amount of risk, and the ones relating to cryptocurrencies need to be mitigated since they can be used for evil purposes.
While it is true that most of us have control over what to do with our crypto assets, Mandelker stated that it is in the hands of financial institutions and cryptocurrency services providers to try to force a stoppage in illicit acts and not helping the bad actors harm the reputation and security levels within the industry.
“The digital currency industry must harden its networks and undertake the steps necessary to prevent illicit actors from exploiting its services,” she said, possibly referring to crypto exchanges, wallets, and other service providers within the field.
Combating Money Laundering and the Financing of Terrorism
Regulatory frameworks need to be strengthened, too, according to Mandelker, which would be a responsibility for international regulators through anti-money laundering (AML) and Combating the Financing of Terrorism (CFT) regarding cryptocurrencies.
The AML, says Mandelker, needs to supervise and enforce the law, and there is supreme importance in sanctions obligations. “The lack of AML/CFT regulation of virtual currency exchangers hosted wallets, and other providers — and, indeed, of the broader digital asset ecosystem — across jurisdictions exacerbates the associated money laundering and other illicit financing risks.”
The US Department of Treasury recently adopted a new approach to track illicit actors who used cryptocurrencies and other innovative technologies to perform their shady acts, such as money laundering and transferring funds of dubious origins: these criminals implemented the “SamSam” malware, which has changed the fate of 200 victims so far, some of them being public organizations.
Mandelker explains that in the scheme, two Iranians served as helpers in the exchange of the ransom, paid in Bitcoin, to Iranian rial for the hackers involved. The two facilitators are now, since last week, on OFAC’s Specially Designated Nationals and Blocked Person’s (SDN) list. “For the first time ever, OFAC attributed digital currency addresses associated with designated individuals,” Mandelker said.
In the same vein, several countries around the world are taking the matter of security in crypto-related assets very seriously. For example, the Estonian Ministry of Finance recently announced that it will add amendments to a financial bill made to tighten regulation in this front.
The bill will make sure to include “virtual currency exchange service providers” and “virtual currency payment service providers.” Prior to the introduction of the bill, the correct term to treat the assets was “alternative means of the payment service provider.”
By Andres Chavez
